The January 2027 unfair dismissal changes: a guide for sales and operations directors

From 1 January 2027, employees in Great Britain can claim unfair dismissal after six months in the job instead of two years, and the cap on the compensatory award is removed. There is no transition period. If a rep you let go in February 2027 says the process was unfair, a tribunal will ask what their manager recorded in the months before.

What changes on 1 January 2027

Four things, all from the Employment Rights Act 2025.

1. Qualifying period drops from two years to six months. Acas states that from 1 January 2027 employees will have the right to claim unfair dismissal after six months in a job. Today it is two years. Most sales teams and contact centres turn over a large share of their people inside two years, so most of your leavers have never been able to bring a claim. From January they can.
2. The cap on the compensatory award goes. Until then the compensatory award for ordinary unfair dismissal is capped at £123,543 or 52 weeks' gross pay, whichever is lower (the figure set from 6 April 2026). From 1 January 2027 that cap is removed. Awards are still based on actual loss, so for most reps the exposure is months of pay plus the cost of defending the claim, not a headline number.
3. No transition period. Law firms covering the change point out that anyone recruited before July 2026 gains unfair dismissal protection on 1 January 2027. You cannot wait it out.
4. Tribunal time limits already doubled. From 1 October 2026 the time limit to bring most tribunal claims moved from three months to six, for acts on or after that date. A leaver has longer to decide.

Two things did not change. The "day one" unfair dismissal right that was proposed in 2024 was dropped in November 2025 in favour of the six-month period, so pages that talk about day one rights are out of date. And tribunals still reduce awards where the employee contributed to the dismissal, failed to mitigate their loss, or would have been dismissed anyway had a fair process been followed (the Polkey reduction). That last point is the whole reason this page exists. A fair, recorded process is what cuts the award.

Why it lands on sales and ops, not HR

HR writes the policy. The floor manager produces the evidence. When a tribunal asks whether a rep was given a fair chance to improve, the answer is not in the handbook. It is in whether their manager actually did the call reviews, held the one-to-ones, and gave the help they said they would, on the dates they said they would.

In fourteen years running sales floors and contact centres, our founder never once lost a case on policy. Every one lost was lost on records. The manager said they had coached the rep. The rep said they hadn't. There was nothing in writing, or what there was had been written the week before the hearing. That is the gap January 2027 opens up to every leaver with six months' service.

There is a second cost. Under section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992, a tribunal can raise an award by up to 25% where the employer unreasonably failed to follow the Acas Code of Practice on disciplinary and grievance procedures. That Code expects a fair investigation, the chance to improve, and a record. A manager who cannot show the help they gave is not just losing the case, they are adding a quarter to the bill.

What your managers need on file

This is what a tribunal, and your own HR team, will want to see for any rep who leaves after a performance or capability process. It is also just what good management looks like.

• The target, and the gap. What the rep was expected to do, in numbers, and how far short they were, by month. Not "underperforming". £38,600 short of a £120,000 quarter.
• Dated coaching, by type. Every call review, deal review and side-by-side, with the date it was promised and the date it happened. A list of "regular coaching" means nothing. Twelve dated entries over three months means a great deal.
• What the manager committed to, and whether they did it. "I'll sit with you on Thursday." Did they? The rep's view on that matters more than the manager's.
• The rep's acknowledgement. That they saw the target, saw the gap, and saw the support offered. Signed, dated, with the figures attached.
• The formal steps. Any PIP, with its start date, review dates, what support was promised and the outcome. Our PIP template for sales teams covers this.
• A record nobody can quietly edit. If the manager can go back and change what they wrote, a tribunal will assume they did.

The common thread is that the evidence is contemporaneous. It was written at the time, by the people involved, and the rep had the chance to disagree. A document assembled in the week before a hearing fails on all three.

A worked example

Omar runs an outbound team of eight. Five are short of target this month. Three of those five have had no coaching event logged in four weeks. One of them, Jade, is let go in March 2027 after nine months.

Without records, Jade's claim writes itself. She was never properly managed, nobody helped her, and the first she knew of a problem was the meeting that ended her job. Omar remembers it differently but has nothing dated to show.

With records, the same case looks like this. Jade's target and gap, month by month, which she acknowledged each time. Nine coaching events over the last three months, four of them call reviews, each confirmed by Jade as having happened. A PIP started in January with three support commitments from Omar, two of which Jade confirmed were kept and one she disputed, with the dispute logged and resolved by ops. A signed final review. Omar may still have managed badly in places, but the process was fair and the record proves it. That is the difference between a settlement and a defence.

Six things to do before January

1. List everyone who passes six months' service on or before 1 January 2027. They are the new exposure. Anyone hired before July 2026.
2. Decide what "a coaching event" is in your business and make managers log them by type. Call review, deal review, side-by-side, formal. Our coaching log template is a start.
3. Put manager commitments in writing, weekly. Three or four dated promises per rep. The sales one-to-one template builds this into the meeting.
4. Get reps to confirm, not managers to report. A manager's own log of their coaching is better than nothing, but it is still the manager marking their own homework.
5. Fix any live performance cases now. If someone is already on an informal warning with nothing written down, start the record today, with dates from today. Do not backfill.
6. Ask your HR adviser or solicitor to check your capability procedure against the Acas Code. The 25% uplift applies where the Code was unreasonably ignored.

Download the manager evidence checklist

How Welivo records this

Welivo is built around the list above. Managers make dated commitments to each rep every week. Reps confirm by email, in private, whether each one was kept, and the manager never sees individual answers. Coaching events are typed and dated. Reviews are signed by the rep with the figures attached. Every entry is hashed to the one before it, so nothing can be changed after the fact without it showing. Leaders see, every Monday, which reps are short of target and which of those have had no help. See how it works, or book a walkthrough.

Sources

• Acas, Employment Rights Act 2025. The 1 January 2027 date, the six-month qualifying period and the removal of the compensation limit.
• Farrer & Co, Removal of the unfair dismissal compensation cap. No transition period.
• Penningtons Manches Cooper, Unfair dismissal: removal of the compensation cap. Mitigation, contributory conduct and Polkey.
• Employment Rights (Increase of Limits) Order 2026 (SI 2026/310). The £123,543 figure from 6 April 2026.
• Trade Union and Labour Relations (Consolidation) Act 1992, s.207A. The Acas Code uplift.

Reviewed by: not yet reviewed by a solicitor. If you are an employment solicitor in Manchester and would like to review this page and be credited, get in touch through the book page.